tv Nightly Business Report PBS July 29, 2015 1:00am-1:31am PDT
this is "nightly business report." >> yearning for earnings. investors get more of the profit score cards they crave. yelp? ouch. >> the great rate debate. why fewer top street wall street strategist think the federal reserve will hike rates in september. >> why fewer and fewer americans are buying their own home. that and more for the "nightly business report." >> a rebound on wall street. stocks halt their slide since the start of a two-day federal reserve policy meeting and away from china.
by the close, it rose to 17630. and the s&p 500 gained 25. >> exxon mobile and chevron were big gainers today because of the rise in the price of oil today. >> and two earnings came from pfizer and merk. they were held for the pneumonia vaccine and the breast cancer drug. merck also raised their profit gains. ford reported a blowout quarter. posted their best earnings in 15 years. north america is strong but there is a growing concern about the world's largest auto market
china. it may sound cliche but it is good business is booming for ford in north america where they just had their most profitable quarter ever. in part because of strong demand for trucks and suvs. take the new f 150. customers are paying almost $3800 more for the new truck in that model. that is something that we don't see very often in the auto try. with auto sales nearing a record high many are worried that the industry has peaked. but ford's ceo is not worried about americans hitting the brakes. >> there is a lot of discussion around about the market being at a peak. i term it at a plateau. the market is driven around
replacement demand. >> ford is not as optimistic about china. they cut their outlook for the industry in that country saying full-year vehicle sales could be slightly negative as china's economy slows down. >> ford is not cutting production or sales targets for that country. primarily because it's strongest in smaller cities in western china where demand is still robust for cars and suvs. strong sales in china made volkswagon the strongest ever. it now accounts for a third of vw's total sales. >> chinas market closed lower today, but not as shashlly today, the composite fell 1.7%.
one respected wall street watcher who called the bottom of the shanghai composite in 2013 says the move in china mirrors the u.s. crash in 1929 and he expects the index to decline even further. >> although chinese basedas stocks are not widely owned, there are a lot, 144 to be precise. and it has hit these stocks hard e rating some $140 billion worth of paper wealth. here are the companies that lost the most market value. more than 7.5 billion down jd.com 4.5 million lower. vip shop. so as the economy slows, chinese consumers are spending a lot less. as court any reagan reports,
many luxury retailers around the globe are growing concerned and perhaps with good reason. >> chinese consumers are responsible for nearly a third of all luxury sales around the world. their market is slowing and it is causing shock. plus chinese consumers are starting to divert spending to experiences. second homes, and art work. the chinese government crack down on corruption that ended lavish gift giving and luxury companies have cause for concern. >> it has been a huge driver of luxury in the last ten years and i think it has come in different waves. were now in a second wave that is a very high end chie need con seemer feeling less comfortable. >> brands like gucci call 2015 a year of reflection in china after years of rapid expansion
sales grew just 3% compared to 20% in western europe. the cfo says trends are not encouraging in hong kong warning investors not to expect inprovement any time soon. the second half ofd the year, warned a diamond company, says is there is a slowing diamond jewelry demand in china. a number of analysts are lowering earnings expectation. >> they believe there has been a shift away from spending to more experience goods in china. i think with the political environment there, the display of wealth they think was so endemic for a number of years in china is not really appropriate in this environment. >> there are some indication that's chinese tourists are pieing luxury goods outside of
china. in places like europe where the weaker euro makes goods more expensive. while louis vitton sales were negative in china, it adjusts sales in other countries. >> and if chinese consumer preferences have changed and they're buying less luxury merchandise in china, it could be a warning sign of trends to come. for "nightly business report" i'm courtney reagan. china has roughly 90 million retail investors and their bearing the brunt of the sale off. tomorrow we'll have a story of one farmer that invested saveings in one stock and unfortunately lost it all. >> many top strategists and economists are starting to
change their timing of when the central bank may start hiking ranks. >> as they begin their two-day july meeting, they look for a rate hooik in november but the conviction is slipping. they find just over half of 35 respond don'ts were forecasting the first rate hike will come in september. the concerns are weak overseas dprout. a u.s. job market where not as many people can find work as they would like. >> the key thing is that many people need to be pretty confident that the inflation rate will begin at some point in the not too distant future to move up to the 2% target. so if the wage data in the labor market reports were weak. i think that could be pushing liftoff back.
82% expected a hike in 2015 but that's down from 92% in the prior survey. if not in september, the second choice is december. respond don'ts are still optimistic about growth, just not as optimistic as they were. they lowered the forecast to 2.7%. for twiflt they edged it up just a bit to 2.4%. >> the concern about global economic weakness tops the survey for the third straight time suggesting to some that the feds should delay rate hikes. >> you have a serious crisis in china and in europe and greece. this is no time to do that because if they did the dollar will go through the roof. you will see that cross with the yur flow that case, and the expercentex exports simply cannot take it.
>> stock market bulls are still wins out on wall street but they tampered their optimism. they look for 3% danegains and 9% in 2016. so last call for interest rates from the fed are still coming but they believe closing time could be a little later. steve leisman in washington. american investors keep roughly a quarter of their investments in mutual funds, $18 trillion in all. and they're subject to all of the cross currents in play in the market today such as china, worries about bond defaults and more too. here to assess the risks is brian reid the main trade group, the investment company institute. good to see you. >> thank you for having me on. >> how exposed in your opinion do you see mutual fund and
holders in china. >> of that 18 trillion that you mentioned, $150 billion is sitting in chinese stocks. that is less than 1%. there is more concentration in an emerging market fund but still that exposure is limited for the typical investor. >> where are those stocks held? >> the one that the u.s. funds own are largely in hong kong and the u.s. exchances. because of that connection between shanghai and hong kong has been knew there is not a lot of direct investment. >> what about those that hold a mainstream u.s. mutual fund with apple, ford boeing
caterpillar. does that not give them exposure indirectly? >> yes, but those companies are largely driven by exports. while there is some internal chinese demand for those products a lot of it is exporting back to europe and the united states and that's where a lot of the demand for that product is coming from. >> let's talk about the rates, however they rise, it will be the first time in a long time that they will have to experience what happens when interest rates go up. what happens to their funds price? >> the average bond fund has a duration of 4 to 4.5. you can expect your bond fund to
fall 4% to 4.5% in price. but the return will be swho higher than that negative 4% because of the fall. >> one of the crisis on the back burner is puerto rico and the bond crisis going on there. how concerned are you about that and how concerned should the average investor be able that? >> when you look at the bond funds holding puerto rico there is about 50% of the municipal bond funds holding some of the puerto rico funds. it is about the share of puerto rico bonds in the overall market. there are some that hold more than that because of the way they specialize but i think it is important to keep in mind that the price effects are already built in. if you get in now, you're locking in those losses.
3 cents better than the estimate. also better than expected and a huge increase from last year as you see there, 60%. shares rose in initial after hours trading before falling back. is the company working past their recent missteps? we have the one key take away from twitter's report. >> the push to grow add revenue seems to be paying off. they beat expectations thanks to growth from engagements a year ago. the cost grew 6%. twitter is growing those add results despite slow user growth. they added 2 million more users ending with 3 million more active users. including msm followers, people who access the service only via text message, ended the quarter with 316 million users.
ups turned in a strong quarter. earnings jumped and guidance for the rets of the year was revicesed higher. it helped lift the entire transport sector, but the biggest market could be cause for concern. >> today the delivery giant ups delivers an earnings feet. they have currency exchange and surcharge to customers. they did reiterate their full year outlook. on strong international growth in europe. but ups is also largely viewed as a barometer of economic growth. and they have seen a slight slow down in their biggest market. >> we're seeing some mixed signals in the u.s. economy. i think part of it is the u.s. dollar the strength part of it could be worried about what the
fed may or may not be doing in the next coming few months. but there is a little bit of a slowing. we have even seen the pace of b to c grow pretty rapidly. >> b to c meaning business to commerce shipping. higher prices and volumes did push profitability in the international segment to a record high. they say that and a lower fuel bill boosted the bottom line. >> one thing affects profitability was the cost of fuel. the cost dropped every bit as much and maybe even more and that helped earnings as well. >> analysts are waiting to see how ups performs during peak holiday season after two disappointing fourth quarters in a row.
>> they're taking a variety of steps to prepare. deployed hundreds of access points and continuing to upgrade and automate the shipping network. a disappointing outlook weighs on dupont and that is where we begin tonight's market focus. they tripped their outlook for the year on weakness. they also slashed their dive dent from 49 cents a share to 38 cents a share and they plan to buy back $48 million in stock per month. shares slipped 1.5% to 55.90. jet blue bucked the trend in the quarterly report. they don't expect passenger revenue to drop. shares rose to 22.82.
bp still feels the impact of the oil spill. a $6 million loss and the oil giant also announced a cut to the full year capital spending plan. despite all of that, shares were higher as energy shares rose today. >> super value is considering spinning off their save a lot into a separatelyto traded firm. the news came with better than expected growth in stocks and a revenue. dr horton's quarterly profit nearly doubled as they saw orders rise more than 20% and revenue up was double digits. and the start of trading today in the biggest bio tech
public offering in memorable history. they have a market cap of more than $2.5 million. the more than million public shares were $25 a piece. they closed with an increase of 38%. >> home prices continues to rise in may, the s&p case shieler home price index rose nearly 5% from a year ago, but they went on to say that the rate is more likely to slow now thanw to accelerate. >> in the meantime the share of americans that own their homes fell to a 48 year low in the second quarter. it extends a multiyear decline, and it is a trend that could continue. >> not since 1967 when neighbors looked like this and backyard barbecues looked like this did such a small share of americans
own their own home. the u.s. home ownership rate fell to just 63.4% in the second quarter of this year. down from a peak of 69% in 201404. that was at the height of the housing boom when anyone could get a loan. >> household formation is rising. that's when say, young adults move out of parent's homes or roommates celebrateseparate and get their own places. the new households are all rental households. >> that is what is behind the surge in the multifamily mark. the ceo said q 2 and year to date results exceeded his expectations and he expects accelerating apartment demand to support stronger performance across the business. apartment demand is soaring as
health care spending it on the rise. a new report shows that it will increase nearly 7% annually. some of the reasons include expanded coverage under the affordable care act. stronger economic growth expensive medications and an ageing population. >> small businesses have been considered the engine of job creation and mayors across the country are trying to lure start ups to their cities. once a month we will profile a company fostering entrepreneurial. tonight we're going down tobacco road in durham north carolina. >> we like to explain it has a place with a great vibe and great barbecue. >> for those looking for a alternative to san francisco or new york durham new york is the new start up capital of the south. a former tobacco warehouse is
now home to 240 early stage companies in an incubator called the american under ground. after they get off the ground, they're not fleeing for the coast, they're staying put. >> it is an incredible asset base in durham venture capital firms. there is a great quality of life and they end up staying. >> tatiyana created her energy drink prandbrand mati energy. she got a $5,000 investment from steve case but she is not planning to relocate any time soon. >> it's where my company was
born where my first companies were. >> durham is on the short list to receive google fiber, the high speed internet project in the near future. and they receive both financing and mentorship opportunities for their start ups from the internet giant. they took advantage of those opportunities by applying to the landing spot. >> it meant everything to us because you have unlimited resources that you can tap into. the american under ground provided us some structure, teaching us how to do our message. teaching us what does it mean to do lean start ups. >> paterson is living her dream now of being her own boss. she is reinvesting herself in a place that is reinventing itself.
for nightly business report in durham north carolina i'm kate rogers. >> to remore about the small business revival in north carolina go to our website. and comcast ventures is an investor in american under ground start up. they're the parent of cnbc which producing this program. that is "nightly business report" for tonight. thanks for watching. have a great evening, everybody. and we'll see you back here tomorrow night.
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